Globalization is an ongoing process, where the interdependence of countries is becoming stronger and stronger. In that regard, international trade can be considered as one of the aspects of such globalization, where importing and exporting goods on a global basis is an apparent indication of such globalization. On the other hand, international trade includes processes other than global imports and export of products, where international investments and outsourcing can be seen as aspects of international trade. In that regard, there are several opportunities that international trade can bring to workers, as well as several threats, which will be overviewed in the following paragraphs.
The opportunities for workers can be seen through the relative rise in the income, where companies opening affiliates and branches in other countries, bringing their specialists might result in a certain equalization of incomes and a raised standard toward which the local companies will be forced to follow. Such aspect is not limited to income but might be extended to business practices, health and safety measures, work standards, etc. New companies bring new opportunities, technologies, which might sufficiently increase the productivity of the worker, as well as increase the knowledge and the expertise of the local workforce.
Accordingly, international trade’s main indicators in global exports and imports can be seen through the creation of more and better jobs. According to the concept of comparative advantage, the increase of imported goods that were produced at lower costs will eventually lead to the creation of jobs, in which the local workforce is more productive, the effect of which can be seen in the long term (Crain & Lee, 2005).
The threats that might be seen from international trade, which oppose the long-term opportunities indicated in the previous paragraph, are seen in the short-term consequences that might be seen especially in the labor force of developed countries. According to the Stolper-Samuelson theorem, the trade between the rich capital-abundant country and poor labor-abundant country, the profits in the rich country increases, while the wages fall (Palley, 2005). The logic of such theorem can be seen through the fact that it is economically feasible for a company to close a factory, which forced the company to pay $6 per hour if the company can pay for the same work to be produced abroad at the cost of $1 per hour. The latter is specifically true for labor-intensive productions, where such differences in wages, justify the exports and the tariffs imposed on these goods being imported to the developed country. In industries that cannot be closed due to their impact on the national security of the country, the competition for foreign products might lead to that the wages paid for workers being reduced.
The challenges that lay ahead of international trade can be seen through the need to establish international standards that will cover and protect the workers on an international basis, in terms of minimum wages, health and safety measures, social security, etc. Additionally, one of the main challenges can be seen in the acknowledgment of the benefits of international specialization, where countries with cheap labor producing everything to compete in the global market will negatively impact the wages level in other countries as well as put themselves at risk of sudden changes in demand and subsequent worsening of the country’s terms of trade (“Globalization and International Trade,” 2005).
It can be seen that international trade cannot be perceived from one side only, where the increase of such practice, although beneficial, it carries many threats as well. The challenges of international trade can be seen in eliminating the factors that contribute to such threats.
References
Crain, C. D., & Lee, D. R. (2005). International Trade Creates More and Better Jobs National Council on Economic Education. Web.
Globalization and International Trade (2005). World Bank. Web.
Palley, T. (2005). The Global Labor Threat. TomPaine.com. Web.